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Musical Streaming Service Policies Drawing Attention of Artists

The worldwide music streaming services industry is growing at a significant rate. Valued at $12.8 billion in 2019, the industry is expected to generate revenues in excess of $24.5 billion by 2027. Streaming platforms like Spotify, Apple, and Google are a welcome avenue for musical artists and labels such as Universal Music Publishing Group, Sony Music Entertainment, and Warner Music Group.

Plagued in the past by illegal pirating of musical rights, performers and labels are finding that streaming services virtually eliminate illegal sharing. Online music streaming services allow users to play and listen to the music of choice anytime and anywhere through digital devices. Coming advances in 5G technologies, virtual reality, and machine learning will facilitate users’ ability to customize and enjoy a seamless user experience. But some artists are questioning the economics of musical streaming services.

Stars including Paul McCartney, Kate Bush, Robert Plant, and Stevie Nicks have called for European government action to reform the method musicians are paid when songs are streamed online. The Digital, Culture, Media and Sport Committee (DCMS) say that many successful musicians received “pitiful returns” from streaming services and are calling for a fairer compensation formula for artistic works. Committee chair Julian Knight MP said, “While streaming has brought significant profits to the recorded music industry, the talent behind it – performers, songwriters, and composers – are losing out.” The committee expressed concern that the current formula will impact new performers’ opportunities to break into the music industry.

Representatives from major streaming services are willing to talk about the current royalty system but point out that 70 percent of revenues are going to labels, publishers, and artists. “New” music from new artists accounts for just 33 percent of music streaming, with older performers and music favored by streaming listeners. Performing artists are proposing that royalties should be split evenly between labels and artists and call for new legislation that allows musicians to “reclaim the rights to their work after a certain period of time, improves artists’ rights to adjust contracts, and increased transparency about how much money is flowing from streaming services.” Musicians currently receive about 16 percent of streaming revenue.

A relatively small number of “big tech” providers of online distribution of products and services continue to exert increasing levels of influence on the price to sellers to play the online eCommerce game. Fears that the pricing policies of digital companies disadvantage smaller retailers and musical performers will likely draw additional attention from legislatures and regulators across Europe and the United States.